With over 88% of Australians belonging to a loyalty program and the millions of dollars spent to service them, it is hard to believe no Australian research study has been conducted on loyalty programs and their actual effectiveness until now.
In what is believed to be the first research study of its kind in Australia, Directivity and Citrus, together with First Point Research, recently published their insights into consumer relationships with loyalty programs in Australia.
And the insights are telling. Here are the top six insights of the study:
1. Loyalty programs do influence buying behaviour but not typically customer loyalty
From a brand preference standpoint, having a loyalty program can actually help tip the scales in brand adoption. 55% of your target market will choose a product/company with a loyalty program over one without.
What’s more, loyalty programs are prime to increase customer share-of-wallet too : 80% of people will buy more from companies whose programs they are a member of.
These insights are particularly hard to ignore if you operate in a highly competitive, almost commoditised market.
Loyalty programs alone however, do not pave the way for increased loyalty – only 46% feel more loyal to a brand because of a loyalty program.
2. The Loyalty landscape is noisy so find your niche
The market is cluttered with loyalty programs. Only 12% of us don’t belong to a loyalty program and on average, we belong to 3-5 programs. In fact, 11% of Australians belong to more than 10 loyalty programs.
The key here is only engage in a loyalty program if what you are offering breaks through the clutter and is of value to the demographic and behavioural profile of your audience.
3. Men are members of few programs but are more active than women
Men belong to fewer programs than woman, 3 vs 5 cards on average, but are more likely to present their card at point of purchase. Women on the other hand are more likely to spread their spend across programs.
4. Show them the money; Cash is king
The most important factor for consumers is unexpectedly monetary with 80% seeking immediate price discounts followed closey by a rewards points system (77%).
5. Show them the love too
The monetary factor behind loyalty will not drive loyalty alone and in silo, can errode profit margins from customers who would have transacted with you without the discount. Hence why many companies are reclutanct to sink costs and make the investment.
When loyalty will come from however is from an emotional connection I.e. the surprise and delight factor that comes with getting an unprovoked $10 voucher on your birthday aka the ‘Awww’ factor.
However a good loyalty program must have both emotional and transactional benefits. The path to loyalty is paved if you can show you out-care your competitors.
6. Personalised email rules but don’t count out snail mail
So this one should be obvious right? Obviously the oldies want snail mail and young techno-babbles want email? Wrong! So engrossed is Gen Y with tech that letters are now seen as novelty with personalised mail appealling particularly to under 25′s.
Email however still trumphs with 81% of people preferring personalised email vs 37% preferring direct mail.
The key takeout here is personalisation so don’t even THINK about a loyalty program if your idea of CRM (or at least a dynamic database) is a manual spreadsheet.
Remember the key is to ‘out-care’ and when have you thought your date cared when they forgot your name the morning after aye?
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